Grafenia CAPEX surged on 855% and Revenue surged on 40.1%
11 Jun 2018 • About Grafenia (
$GRA) • By InTwits
Grafenia reported FY2018 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is declining: 5.3% in FY2018 vs. 7.3% in FY2017 vs. 13.6% in FY2014
- EBITDA Margin is quite volatile: 5.3% in FY2018, 7.3% in FY2017, 11.3% in FY2016, 19.8% in FY2015, 13.6% in FY2014
- Grafenia has low CAPEX intensity: 5 year average CAPEX/Revenue was 3.1%. At the same time it's a lot of higher than industry average of 2.5%.
- CAPEX is quite volatile: £1m in FY2018, £0m in FY2017, £0m in FY2016, £0m in FY2015, £0m in FY2014
- The company has unprofitable business model: ROIC is -17.2%
- It operates with high leverage: Net Debt/EBITDA is 3.8x while industry average is 1.6x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue jumped on 40.1%. Revenue growth was financed by EBITDA margin decline. EBITDA Margin decreased on 2.0 pp from 7.3% to 5.3% in FY2018. During the last 5 years EBITDA Margin topped in FY2015 at 19.8% and was declining since that time.
Gross Margin decreased on 6.1 pp from 63.0% to 57.0% in FY2018. During FY2014-FY2018 Gross Margin topped in FY2015 at 70.8% and was declining since that time.
Net Income margin showed almost no change in FY2018. Net Income margin stuck to a declining trend at -3.5 pp per annum in the last 5 years.
Investments (CAPEX, working capital and M&A)
In FY2018 the company had CAPEX/Revenue of 7.8%. Grafenia's CAPEX/Revenue increased on 6.2 pp from 1.6% in FY2015 to 7.8% in FY2018. It's average level of CAPEX/Revenue for the last three years was 4.3%. The company has spent a lot to CAPEX (147% of EBITDA) to secure its growth.
Return on investment
The company operates at negative ROIC (-17.2%) and ROE (-22.0%). ROIC showed almost no change in FY2018. ROE decreased on 9.3 pp from -12.7% to -22.0% in FY2018. ROIC declined at -8.7 pp per annum in FY2014-FY2018. ROE followed a declining trend at -10.1 pp per annum in FY2014-FY2018.
Leverage (Debt)
Company's Net Debt / EBITDA is 3.8x and Debt / EBITDA is 4.0x. Net Debt / EBITDA jumped on 4.0x from -0.3x to 3.8x in FY2018. Debt jumped on 925% while cash dropped on 67.4%.
Grafenia has short term refinancing risk: cash is only 8.5% of short term debt.
Financial and operational results
FY ended 31 Mar 2018
Grafenia ($GRA) key annual financial indicators| mln. £ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 19.443 | 11.024 | 10.766 | 10.445 | 14.630 | 40.1% |
| Gross Profit | 10.904 | 7.805 | 7.135 | 6.585 | 8.337 | 26.6% |
| EBITDA | 2.650 | 2.178 | 1.213 | 0.763 | 0.771 | 1.0% |
| Net Income | 0.863 | 0.848 | 0.064 | -0.625 | -0.946 | |
Balance Sheet
|
|---|
| Cash | 1.401 | 1.277 | 0.686 | 0.524 | 0.171 | -67.4% |
| Short Term Debt | 0.000 | 0.000 | 0.066 | 0.083 | 2.009 | 2,320.5% |
| Long Term Debt | 0.000 | 0.000 | 0.264 | 0.216 | 1.055 | 388.4% |
Cash flow
|
|---|
| Capex | 0.214 | 0.172 | 0.438 | 0.119 | 1.136 | 854.6% |
Ratios
|
|---|
| Revenue growth | -5.9% | -43.3% | -2.3% | -3.0% | 40.1% | |
| EBITDA growth | -5.7% | -17.8% | -44.3% | -37.1% | 1.0% | |
|
|---|
| Gross Margin | 56.1% | 70.8% | 66.3% | 63.0% | 57.0% | -6.1% |
| EBITDA Margin | 13.6% | 19.8% | 11.3% | 7.3% | 5.3% | -2.0% |
| Net Income Margin | 4.4% | 7.7% | 0.6% | -6.0% | -6.5% | -0.5% |
| CAPEX, % of revenue | 1.1% | 1.6% | 4.1% | 1.1% | 7.8% | 6.6% |
|
|---|
| ROIC | 13.4% | 8.3% | -4.0% | -17.3% | -17.2% | 0.2% |
| ROE | 14.7% | 14.4% | 1.1% | -12.7% | -22.0% | -9.3% |
| Net Debt/EBITDA | -0.5x | -0.6x | -0.3x | -0.3x | 3.8x | 4.0x |
Peers in Support Services
Below we provide Grafenia benchmarking against other companies in Support Services industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Mortice Ltd ($MORT) | 11.0% | 18.9% | 51.1% | 36.1% | |
| Rws Hldgs ($RWS) | 20.9% | 1.8% | 28.1% | 34.5% | |
| Empresaria Group ($EMR) | -3.3% | -0.3% | 44.4% | 32.1% | |
| Norish ($NSH) | 3.7% | 16.4% | 16.7% | 31.4% | |
| Capital Drilling Ltd ($CAPD) | -15.0% | -20.4% | 18.7% | 28.0% | |
| |
|---|
| Median (47 companies) | 5.2% | 7.2% | 3.5% | 7.0% | 8.6% |
|---|
| Grafenia ($GRA) | | -43.3% | -2.3% | -3.0% | 40.1% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Inspired Energy ($INSE) | 78.7% | 76.2% | 80.5% | 83.1% | |
| Ienergizer Ltd ($IBPO) | 76.8% | 72.7% | 71.3% | 71.2% | |
| Spectra Systems Corp ($SPSY) | 51.4% | 47.6% | 68.3% | 71.1% | |
| Vianet Group ($VNET) | 58.8% | 69.2% | 70.1% | 69.7% | 69.9% |
| Billing Services Group ($BILL) | 48.0% | 51.0% | 53.0% | 56.6% | |
| |
|---|
| Median (41 companies) | 29.2% | 28.1% | 27.0% | 27.9% | 19.7% |
|---|
| Grafenia ($GRA) | 56.1% | 70.8% | 66.3% | 63.0% | 57.0% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Northgate ($67GX) | 40.6% | 39.4% | 38.3% | 35.9% | 35.4% |
| Spectra Systems Corp ($SPSY) | 12.3% | 6.0% | 19.7% | 34.0% | |
| Inspired Energy ($INSE) | 1.5% | 35.4% | 34.4% | 32.4% | |
| Vp ($VP.) | 24.2% | 26.2% | 28.4% | 28.6% | 27.2% |
| Rws Hldgs ($RWS) | 22.8% | 23.1% | 26.4% | 25.5% | |
| |
|---|
| Median (47 companies) | 6.7% | 6.9% | 4.9% | 5.7% | 8.9% |
|---|
| Grafenia ($GRA) | 13.6% | 19.8% | 11.3% | 7.3% | 5.3% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Vp ($VP.) | 21.6% | 25.7% | 24.1% | 26.0% | 23.6% |
| Augean ($AUG) | 12.3% | 12.3% | 11.0% | 10.0% | |
| Petards Group ($PEG) | 0.5% | 0.9% | 1.7% | 10.0% | |
| Capital Drilling Ltd ($CAPD) | 13.9% | 10.1% | 13.7% | 9.0% | |
| Billing Services Group ($BILL) | 2.1% | 4.1% | 3.0% | 4.5% | |
| |
|---|
| Median (47 companies) | 1.0% | 0.9% | 1.0% | 0.9% | 2.7% |
|---|
| Grafenia ($GRA) | 1.1% | 1.6% | 4.1% | 1.1% | 7.8% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Sthree ($STHR) | 38.1% | 50.2% | 46.2% | 43.4% | |
| Mortice Ltd ($MORT) | 19.6% | 21.9% | 14.5% | 23.2% | |
| Petards Group ($PEG) | 24.7% | 23.9% | 22.7% | 20.3% | |
| Rws Hldgs ($RWS) | 24.5% | 23.3% | 23.5% | 20.2% | |
| Latham(James) ($LTHM) | 17.5% | 16.8% | 19.2% | 19.3% | 17.4% |
| |
|---|
| Median (48 companies) | 10.0% | 10.7% | 7.9% | 8.1% | 6.9% |
|---|
| Grafenia ($GRA) | 13.4% | 8.3% | -4.0% | -17.3% | -17.2% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Nakama Group ($NAK) | 5.2x | 1.4x | 3.1x | 48.5x | |
| 21St Century Technology ($C21) | -0.8x | -0.2x | | 11.2x | |
| Ceps ($CEPS) | 6.6x | 3.8x | 13.9x | 5.8x | |
| Ibex Global Solutions ($IBEX) | 2.7x | 1.0x | 1.7x | 4.5x | |
| Menzies(John) ($68HN) | 2.0x | 2.4x | 1.2x | 3.0x | |
| |
|---|
| Median (42 companies) | 0.3x | 0.2x | 0.3x | 0.5x | 1.8x |
|---|
| Grafenia ($GRA) | -0.5x | -0.6x | -0.3x | -0.3x | 3.8x |
